The earlier you start planning for retirement, the better. But, while it’s a good idea to save for a distant future, your life should also be balanced. You need to take care of your present financial needs and well-being, too.
You can set aside money for retirement while still having enough money to pay for a mortgage, car payments, and other expenses, by either upgrading your skills to earn more, starting a side hustle, or learning how to be an investor.
Besides saving enough money while maintaining a comfortable standard of living, here are four more ideas to ponder when planning your retirement:
- Consider buying funeral insurance.
What you should know about funeral insurance is that it’s a life insurance product specifically designed to cover all expensed associated with the death of the insured person.
Buying this insurance policy will help you avoid placing a financial burden on your family when you pass away because it will take care of a wide variety of final costs. Besides providing for burial or cremation costs, it will also cover final household expenses, legal expenses, and medical expenses.
- Diversify your investments.
Avoid buying too much of your company’s stock. Although it’s highly unlikely that your large, well-established company will turn out to be the next Enron, you never know what goes on behind the scenes, even if you happen to be part of upper management.
Since the future is unpredictable, it’s better to err on the side of caution rather than optimism. Consequently, only invest about 10 percent in your company’s stock–even if you think it’s better than Apple.
By keeping your portfolio diversified, you’ll avoid losing all your money if one asset collapses.
- Plan your estate.
If you have plenty of money to live on, pause to think about how much money your children will be able to receive.
If you don’t plan your estate, then Uncle Sam will do it for you. Additionally, if you’re leaving behind plenty of money, your family members may not know how to deal with their sudden wealth.
Here are three steps to make sure your money benefits your children and grandchildren in exactly the way you intend:
First, create an estate plan and keep your will up-to-date so that your final wishes are carried out.
Second, research all the planning tools you’ll need to ensure that everything works out the way you’d like. For instance, consider the use of trusts and life insurance.
Third, educate your children on how to manage the money they receive to ensure their future.
- Understand how Social Security benefits work.
One mistake people frequently make is taking out their Social Security benefits too early.
Although you can receive these benefits by age 62 years, it’s not a good idea to take it out then because you’ll get a lower monthly amount. If you wait until age 66, you’ll receive much more. In fact, if you wait until age 70, the government will give you an extra eight percent for every year you waited to claim your benefits. The way to avoid needing to claim Social Security early is to create additional sources of income.
In conclusion, don’t let retirement sneak up on you. It’s easy not to pay much attention to something that isn’t urgent. Plan for your future to make sure you’ll be comfortable when you can no longer work for a living. But, of course, also stay mindful of taking care of yourself in the present. Find ways to either earn more or stretch your dollars to take care of present and future needs.